The newest iPod Nano is incontrovertibly a step up from last year's model, crammed with new features including a video camera. But can the Nano stay the same cool little player while simultaneously invading the Flip-cam market?

This new Nano—the 5th generation—comes in the same 8GB/16GB sizes as the last one (and the one before that, actually), though it costs slightly less than the original price of the 4th generation Nano (which was $150/$200). The $20 price drop is nice, but we'd have preferred a capacity bump with the same price. Correction: This section originally compared the 5G Nano's price to the very recently discounted 4G Nano's price( $130/$150)—but as that price was only in effect for a couple days, it's more accurate to compare the 5G price to the 4G's launch price. Sorry for the confusion.

Body

The new Nano has the same body as the 4th generation, but there are definite changes afoot. The screen takes a bump from 2 inches to 2.2 inches—a jump that may sound tiny but is surprisingly substantial. If you're used to the old 2-inch screen you'll definitely notice and appreciate the extra space for navigation. The resolution goes from 240x320 to the oddball 240x376. Though wider when viewed lengthwise, the new screen still isn't 16x9; even widescreen videos will be slightly letterboxed due to the unconventional size. Aside from the added real estate, it's also noticeably brighter and sharper than the previous model. It may still be too small to watch a two-hour movie on, but it's a pleasure to use for everything else, including shorter video clips.

Unfortunately, that larger screen comes with a caveat: The click wheel is even smaller than earlier Nanos. If you found the previous Nano's click wheel slightly thinner and harder to hit than you prefer, this will be even worse. If you had no problems before, then the slight decrease in size shouldn't affect you much. I personally found it too small, and my thumb sometimes hit the area around the controls instead of the control itself. This is especially true when the Nano is docked.

The anodized aluminum finish is also a little different—there's an added step in the process that makes it shinier and brighter than the previous generation's comparatively subdued matte finish. Oddly enough, it actually feels slightly lighter than the last model, though no less solid—this is an extremely durable player. It doesn't bend under pressure from any angle and a nerve-wracking fall onto a hardwood floor had no adverse effects. However, I found that sharp metal objects like keys will leave scratches, while the previous matte Nano showed no scratches under similar abuse. One bit of bad news: People who hated the sharp corners of the last Nano will have to put up with them for at least another year.

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Features

Did I mention Apple crammed a bunch of new features into the iPod Nano 5G? And that the most notable—and most thoroughly leaked—is a video camera? Here's the rundown:

Video Camera
The big selling point of this Nano is that the video camera theoretically puts it in a position to compete with the Flip, Creative's Vado, and Kodak's Zi6 and Zi8. Steve Jobs said so himself. But is it true? Well, yes—and no.

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Like the Flip-class cameras, there's no optical zoom, and it can't take still shots (very few of these new camcorders can). Also, there's no on-device editing, just the option to delete what you shot. It too has video output, but only if you buy the right cable.

But the Nano is limited to VGA resolution—640x480—far less than that of current HD pocket cams which hover in the same sub-$180 price range. Casual videos meant for YouTube may not need more than VGA, and Apple sort of makes up for it by adding creative video filters, similar to those found in iChat and Photo Booth. These aren't just for fun, they tend to cover up the limitations of the video itself. On the other hand, if you're shooting your baby's first steps, or anything meaningful, no matter how short, you might end up regretting that you didn't shoot in HD.

That being said, it's a remarkably high-quality camera, as good as standard-def pocket cams like the Flip Mino (which I used in the comparisons below).

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When you hold the Nano, you discover that the lens is placed in an awkward location—the lower right corner of the device's back. You can rotate it and the accelerometer will adjust, so it can actually be held in any way you choose, but the natural motion is to turn it 90 degrees counterclockwise (so the screen is on the left and the click wheel on the right), which leaves your fingers right in the lens's way. You get used to it, though. It's annoying but not a dealbreaker.

In video-camera mode, you can bring up those creative filters—cyborg, security camera, film grain, tunnel vision and more—by holding down the center button. They fit right in with the idea of the Nano as a quick-and-dirty camcorder: You wouldn't want your serious short film to have a red, pulsing cyborg filter, but it's really fun for 30-second clips. Speaking of which, the only limit on video length seems to be the remaining memory in the Nano itself.

Here are a couple comparison clips. This first is low-light, notoriously difficult for any budget camcorder to capture.

The Flip is far better here: You can actually make out the features of my kitchen with some certainty, and while it's blurry it's still watchable.

The Nano's low-light video is pretty much pitch black until I hit a patch of light, and it's extremely jerky. I should add that the kitchen wasn't really that dark, but it looks like that tiny sensor is just no good for situations with less light.

This pair of clips is to demonstrate macro. The Nano is actually a little better than the Flip here, with a sharper closeup picture, although color reproduction is a little more accurate on the Flip. Still, closeup shots are difficult and I'm really impressed with the Nano's clarity here. Here's the Flip:

And here's the Nano.

This last series is what most people will likely use the Nano's camera for: Shooting with a decent amount of light, natural or artificial. It's not quite as good here as the Flip—notice the tearing in the video as I pan, and again, color reproduction is a little darker and muddier than the actual object. But given that the Nano's camera is a tiny little lens crammed into an already-tiny music and video player that you may be intent on buying anyway, I'm really pleased and a little surprised at how well it performs.

This is the Flip:

And this is the Nano:

The microphone does a pretty good job at picking up sound. Speech is totally audible and it's sensitive enough to pick up a fairly quiet conversation 10 feet away. Wind shear can get really noisy, unfortunately, but unless it's incredibly windy it shouldn't be much of a problem.

So is the Nano better than a standard-def Flip? No, it's not: Besides poor low-light performance, the straight video quality is slightly inferior and there are no features like digital zoom (which some people like). This is a PMP with a camera, not a camera that plays music. But should Flip be worried? Absolutely. If you have a Flip already, you may not be swayed to purchase the Nano because of its video, but if you buy the Nano, you don't really need a Flip—and Apple's going to sell boatloads of these Nanos for reasons other than video camera anyway. Speaking of which...

FM Radio
Defiantly coming dead last to the FM radio party, Apple finally bestowed an iPod with a real FM radio, not some costly optional accessory. Why did Apple cave? Every single other mp3 player since about 2001 has had this. Your guess is as good as mine. The addition was announced without fanfare or explanation at the Nano's unveiling, and the tuner itself doesn't bring any new features like HD Radio, but it does come in with a suite of features proving, at least, that this wasn't an afterthought.

The radio gets excellent reception, though you have to use your headphones—not just Apple's white earbuds; I used my Shures—as the antenna. There's support for RDS data (station name and song title). That song title data can be used to tag favorite songs so that you can, well, buy them later on iTunes. The coolest radio feature is "Live Pause." You can pause a program for up to 15 minutes, and it caches it to memory. It's really nice addition, and you can even fast forward through the cached content, though you can't truly record and save radio.

Built-In Speaker
That's right, there's a teeny little speaker on the bottom of the new Nano. It's not particularly loud or high quality, but it's damn impressive that Apple could cram it into such a thin player. It's definitely audible in quiet rooms, although you'd probably want to use it for spoken word or video rather than music, as songs tend to get washed out and distorted. Still, I have a feeling I'll take advantage of the speaker even more than the video camera—there was one on the Samsung P3 and it proved extremely useful for those times when you want to share a quick video, or don't feel like plugging in earbuds.

Pedometer
It works, mostly, though it's not a substitute for Nike+. Even Apple says you can't use it for running. I tested five sets of exactly ten steps, and it registered the correct amount twice, but it also registered nine steps twice and thirteen steps once. It'll probably even out for longer walks, but you will never get perfect accuracy. It's still kind of fun, though: Turns out my nearest coffee shop is only 278 steps away from my bedroom, and I burned 14 calories getting there.

Voice Recorder
Using the built-in mic, you can record little voice memos. Sound quality is okay, but very limited by distance. I tested from different distances and found that while about one foot away from the mic, talking at a normal conversational volume (as in an interview or quick voice memo situation), sound quality was very audible and clear. From five feet back at the same volume, it was still clear but soft enough that the volume had to be upped quite a bit. From ten feet back it was still clear but only after I plugged it into my stereo and cranked the volume. When recording very loud music from a bit of a distance (sorry, neighbors!), the volume was fine but the recording came out way too distorted to be worth listening to. It looks like the recorder would be a good tool for memos or lectures, but forget about recording concerts with the Nano.

The Verdict

The iPod Nano is the best-selling MP3 player of all time, and this new model should keep that record alive. It's still an incredibly small and thin player with intuitive navigation and popular software, priced competitively. The new features are really nice—the video camera is good in a pinch, enough to supplant standard-def pocket cams—and the bigger, brighter screen makes navigating through the added options.

The video camera is a major feature addition, but this Nano is still an incremental upgrade. Apple hasn't changed the capacity or price in years—does it really not make sense to release a 32GB version? The 8GB version, only $30 cheaper than the 16GB, seems undesirable and outdated. But at this point what else could Apple add to the Nano? I'm just surprised everything they have added actually fits.

The iPod Touch and other full-featured touchscreen players like the Zune HD and Sony X-Series are the big attention-grabbers these days, and the Nano will surely be left behind as dedicated media players yield to convergence. The steady price and capacity of the Nano and the dropping price and skyrocketing capacity and functionality of the Touch signals the sea change better than anything: Soon the Touch will be top seller, and the Nano will slip into being a niche product for people who really prefer small form factors. There is much speculation that the Nano got the video camera—and the Touch did not—in order to slow this inevitable decline.

So the big question: Should you buy the Nano? Yes, if you want an easy-to-use, slick, full-featured and small PMP. No, if you just want an 8GB vessel for your MP3s.

If you're in the market for both a PMP and a cheap pocket camcorder, it's definitely a "yes." But think it over. If you've got last year's Nano and you have an interest in decent video quality, better to spend the money on a Kodak Zi8 (or the newly discounted Zi6). Or just wait for the iPod Touch to get a camera—now that's an upgrade. The camera alone isn't worth $150 or $180 if you've already got every other feature—maybe that's the reason Jobs himself said it was "free."

Retains stylish and durable form factor, with bigger and better screen